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BRASILIA, July 30 (Reuters) - Brazil's stock market rose sharply on Wednesday as favorable U.S. economic news eased concerns about the global economy and higher oil prices boosted Petrobras shares, while the local currency firmed.

The Bovespa index .BVSP of the Sao Paulo Stock Exchange rose 3.37 percent to 59,997.64 points, adding to Tuesday's gain of 2.06 percent. Oil, mining and steel shares led the index higher.

Brazil's currency, the real (BRBY: Quote, Profile, Research), followed the Bovespa higher and strengthened 0.51 percent to 1.562 per U.S. dollar, also benefiting from a 0.75 percentage point rise in interest rates by the central bank last week.

"Things were significantly better outside and this makes our life easier. With the stock market here in Brazil going above the 59.000 points, the dollar goes down", said Joao Medeiros, currency director at Pioneer Brokerage.

The real has gained nearly 14 percent so far this year, adding to a 20 percent surge in 2007 and pushing the currency to its strongest level since January 1999.

Investors were encouraged by U.S. data showing the private sector unexpectedly created jobs in July.

The U.S. Federal Reserve added to the optimism by announcing it would extend a credit facility that it provides for primary dealers in another move to boost liquidity.

Mining giant Vale (VALE5.SA: Quote, Profile, Research), the second-heaviest weighted stock in the Bovespa index after Petrobras, jumped 6.69 percent to 41.61 reais after Credit Suisse said in a note on Tuesday it expects iron ore prices to rise at least 20 percent in 2009.